South Korean banks see rise in mortgage loans amid credit loan decline

South Korean household debt trends are shifting as mortgage and group loans rise while credit loans decline. In August, the five major commercial banks saw their total household debt balance increase by approximately 3.14 trillion won, reaching 782.1 trillion won.

The increase was primarily driven by mortgage loans, which grew by 3.33 trillion won. This surge is largely attributed to an increase in group loans, including balance loans for apartment move-ins, following regulatory easing by financial authorities to support housing supply and actual demanders.

In contrast, credit loans decreased by 181.5 billion won, marking the first decline in four months. This reversal is linked to increased stock market volatility and stricter management by banks, such as Shinhan Bank limiting new credit loan caps. While authorities are allowing more flexibility for group loans, they maintain a cautious stance on individual mortgages and credit loans to manage overall household debt levels.